Month: September 2010

The British MPC meeting minutes will be the main event for a busy day in the FX markets; with US oil inventories figures dominating the New York trading session. Here’s an outlook for the major events in today’s trading.

08:30 GMT: GBP- MPC Meeting Minutes

The last rate decision by the Monetary Policy Committee didn’t bring any news – the rate remained at 0.50%. But inflation refuses to fully return into the 1-3% target. It will be interesting to see if there’s still one member, Andrew Sentance that wants a rate hike. If others join in his concern of high inflation and vote for a rate increase, the GBP/USD could rise above the short term high of 1.5730.

13:00 GMT: EUR- Belgium NBB Business Climate

This wide survey of 6000 businesses has improved in recent months but remains negative, meaning that the business conditions are expected to worsen. The previous output was -5.1 points. The survey will probably edge up, but still remain in negative territory at -5.0. EUR/USD support rests 1.3160. Resistance is found at the height of the June to August bullish move at 1.3333.

14:30 GMT: USD – Crude Oil Inventories

This data influences the price of petroleum products which affects inflation, but also impacts growth as many industries rely on oil to produce goods. Oil prices might decline to $74.30 before a government report that may show U.S. refineries operated at their lowest rate in five months, signaling less demand for crude to process into fuels.

Being supported by the lower border of the price channel on 4-hour chart, GBPUSD rebounded from 1.5503, suggesting that a cycle bottom is being formed. Now the rise from 1.5503 could possibly be resumption of uptrend from 1.5296, further rally is in favor and next target would be at 1.5800-1.5850 area. Support is at 1.5503, only break below this level could indicate that the rise from 1.5296 has completed at 1.5728 already, then the following downward move could bring price back to re-test 1.5296 previous low support.

Daily Forex Forecast

By Adam Hewison – Today we are going to be looking at gold and analyze the recent run-up that has created a great deal of excitement and fear for many investors and traders.

We’re also going to be looking at some upside measurements that we have for this market. Conversely, we are also looking at an area that should provide support should the gold market pull back from its current levels.

In this new video we are going to be focusing on our “Trade Triangle” technology and what it means for traders. We will explore short-term, intermediate-term, and long-term trading in this precious metal. This will all be done using our “Trade Triangles.”

To see more of Adam’s Videos click here or sign up for Adam’s Free 10-part Professional Trading Course.

All the best,
Adam Hewison
President of INO.com
Co-founder of MarketClub

By Natalie R. – With the FOMC meeting minutes expected to be published today at 18:15 GMT, the main question is whether or not the Fed will hold off from further purchasing securities or decide to expand the stimulus further and thus its balance sheet. With the economy showing signs of slowing for the past two quarters and unemployment enduring at 9.5% or higher for the past year, speculations began to surface the Fed will resume its quantitative easing program in order to stimulate the flailing economy. The negative economic indicators that were published over the past few weeks reinforced this assumption. The Fed is also trying to avoid deflation. The Core CPI, U.S. consumer prices excluding food and energy, rose 0.9% in July from a year earlier, the smallest increase in four decades.

It seems, however, that there is much debate within the Central Bank as well as among investors on how the Fed should continue. Members of the Federal Open Market Committee are divided over whether to renew quantitative easing which is essentially a large-scale asset purchase program. Several members believe the Fed has already done enough and that there are impediments to growth unrelated to monetary policy such as uncertainty regarding taxes and regulatory policy as well as the lagging housing sector.

The Federal Reserve has kept the benchmark interest rate at almost zero since December 2008 and bought about $1.7 trillion in securities. Additional quantitative easing can have adverse effects on inflation in the longer run as this move essentially pumps cash into the economy.

Analysts are also divided in their assumptions, largely due to the fact that the latest data has been slightly better than expected. Manufacturing in August expanded at a faster pace than forecast as factories added workers and increased production. Private employers increased payrolls by 67,000 last month, exceeding economists’ estimates.

The Federal  Reserve’s move is important not only for the USD but for other currencies as well, particularly the JPY as the Bank of Japan has recently intervened in the market in order to weaken the Yen. Japan’s economy is highly dependent on export and therefore a strong currency can hinder its economic recovery. However, due to speculation of further monetary easing by the Fed, Bank of Japan Governor Masaaki Shirakawa’s attempts may be hindered as quantitative easing contributes to a weaker USD.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By CountingPips.com

The latest Commitments of Traders (COT) report, released on Friday by the Chicago Mercantile Exchange, showed that futures speculators cut their euro short positions for the second straight week. Non-commercial futures positions, those taken by hedge funds and large speculators, were net short the euro against the U.S. dollar by -9,644 contracts as of September 14th. This is a decrease of over 14,000 short contracts after speculators were net short the euro by -23,699 contracts on September 7th.

The COT report is published every Friday by the Chicago Mercantile Exchange (CME) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. Open interest is the number of open contracts that have not been closed by a transaction or by delivery.

The euro and the British pound sterling were the major currencies on the short side against the dollar last week in the CME futures market while the Australian dollar, New Zealand dollar, Japanese yen, Canadian dollar, Swiss franc and Mexican peso all continued to have a net long amount of contracts.

The British pound sterling short positions fell to -9,127 as of September 14th after being short on September 7th by -16,068 positions. Pound sterling short positions had increased for two straight weeks before a turnaround in the latest data.

The Japanese yen net long contracts edged lower last week to 47,642 from 52,183 net long contracts reported on September 7th. Yen positions have continued to stayed above the 47,000 level for the past six weeks.

The Canadian dollar positions rose for a second consecutive week to a net of 17,695 contracts after totaling just 452 net longs on September 7th.

Swiss franc long positions fell after gains for four straight weeks to 14,236 long contracts as of September 14th after 16,627 long contracts the week prior.

The Australian dollar positions edged very slightly lower to a net amount of 56,669 long contracts as of September 14th from 56,966 long contracts on September 7th.

New Zealand dollar futures positions jumped higher to a total of 16,839 long contracts after a total of 9,377 long contracts and increased for a second consecutive week.

Mexican peso long contracts edged higher as of September 14th after four straight weeks of decline to 14,957 total long positions from for 14,064 longs the week prior.

COT Data Summary as of September 14th, 2010

Large Speculators Net Positions vs. the US Dollar

Euro: -9,644 short contracts from -23,699 shorts on September 7th
British pound sterling: -9127 short contracts from -16,068 shorts
Australian dollar: 56,669 long contracts from 56,966 longs
Canadian dollar: 17,695 long contracts from 452 longs
Japanese yen: 47,642 long contracts from 52,183 longs
Mexican peso: 14,957 long contracts from 14,064 longs
New Zealand dollar: 16,839 long contracts from 9,377 longs
Swiss franc: 14,236 long contracts from 16,627 longs

Go to the Commitment of Traders CME raw futures data

COT Resources from around the web:

Forecast The FX Market With The COT Report

The Only Indicator You Will Ever Need

It’s another manic week Forex friends! In today’s FX feature I present to you the daily chart of AUDJPY. As you can see, the pair has recently broken out (upside) from a nice symmetrical triangle formation. This breakout could swing the pair towards its previous high near the 88.00 marker. Projecting the base of the triangle from the point of breakout, the resulting upside target would be at 88.00 as well. The Aussie’s run, however, may be tempered for awhile because conditions are already overbought. The pair could range or retrace shortly before heading north again. And given it’s recent spike, it could potentially form a flag or a pennant pattern. At present, the AUDJPY pair is trading just above 80.00. Therefore, if it reaches 88.00, that would be a sweet 10% gain (1:1 margin).

The recent rally in the global equities market and gold’s rush towards fresh all-time high (see my recent post here) have helped the commodity dollars like the AUD. For this week, no high impact economic reports are due from Australia. The major releases, though, from the US, Canada, and New Zealand would more likely sway the Aussie’s short term movement. The US Fed, of course, will have its monetary policy decision on September 21. Building permits, new and existing home sales plus durable goods orders are due as well from the US. In Canada, the country’s CPI and retail sales accounts are on deck on September 21 and 22. New Zealand, Australia’s neighbor, will likewise publish its second quarter GDP growth. Risk appetite, resulting from one or all the these accounts could benefit the non-dollar currencies like the Aussie. The opposite, however, would weigh on it. Watch out for these reports!

More on LaidTrades.com …

By Dan Eduard – The Nasdaq 100 has been seeing a steady upward trend over the last several weeks as a series of economic indicators have pushed up CFD’s along with other riskier assets. As will be shown through a number of technical indicators, the Nasdaq has been trading in overbought territory for some time and is overdue for a downward correction.

We will be looking at the 8-hour chart for the Nasdaq 100, provided by Forexyard. The technical indicators being used are the Stochastic Slow, Relative Strength Index (RSI) and Williams Percent Range.

1. The Stochastic Slow shows that a bearish cross is close to forming right around the 80 level. Typically, a cross formed above the 80 line indicates a downward correction is likely to take place.

2. The Relative Strength Index is trading well above the upper resistance line, and has been for some time. This indicates that the CFD has been overbought for an extended period, and is likely to drop in the very near future.

3. Finally, the Williams Percent Range is currently right around the -5 level. Anything above the -20 mark is generally considered to be in the overbought region, meaning the Nasdaq is likely to experience heavy downward pressure.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

The main risk event ahead is today’s FOMC announcement. Although the prospect of further quantitative easing has been highlighted for this meeting, our analysts do not think that will be the case. They expect little change to the statement language describing the current conditions or the outlook. On the growth outlook, however, our team notes that Fed officials may alter the phrase that near-term growth will be “more modest…than had been anticipated” in order to avoid implying a further downgrade. While there is a possibility that the Fed might signal increased readiness to ease its balance sheet policy further, our analysts do not believe that the medium-term outlook has deteriorated enough to warrant the change. If no further quantitative easing is announced, the USD should be supported as expectations of further quantitative easing being priced in weighed on the USD last week.

EUR

Sovereign bond yields rose across the peripherals in the European session over fears that Portugal may not be able to meet its fiscal targets. Both Portuguese and Irish 10y spreads vs. Germany reached record highs, widening to 375 and 412 basis points, respectively. This followed news on Friday, where a headline in an Irish newspaper warned that Ireland was “perilously close” to calling in the IMF. The government described the article as “a local misinterpretation of a research report”, and the IMF said it does not foresee its assistance being needed in Ireland.
Ahead of today’s Irish bond auction, in an attempt to calm the market, Irish Prime Minister Cowen and Finance Minister Lenihan held a press conference in which PM Cowen said that he had the full support of his colleagues and Finance Minister Lenihan said that bond markets are not influenced by minor political disputes.
Both ECB Governing Council Members Nowotny and Mersch opined on the future of the ECB’s liquidity tenders, a topic that has proven to be a significant driver of the euro in recent weeks. Nowotny noted that some parts of the Eurozone banking system are “addicted” to ECB liquidity, and that the problem should be solved primarily by governments. Mersch said he saw “no need to hold onto full allotment”, noting that “short term rates can be very easily controlled via competitive tenders”.
JPY

With Japan on holiday, USDJPY was relatively quiet and range bound on Monday despite an early dip, suggesting the BoJ has not been active in FX markets since Wednesday.
Speculation is mounting that a bill aimed at incorporating an explicit inflation target into BoJ Law could soon be presented to Japan’s Diet. We are sceptical of claims that a change to the Law is imminent on two counts: first, parliamentary time in the immediate future is likely to focus on agreeing the terms of the budget for the coming fiscal year; second, a change to BoJ Law would require the approval of both the upper and lower houses of parliament. With no party holding a majority in the upper house, at the very least this would likely complicate and delay the passage of any such bill. The next parliamentary session is expected to begin in early October.
GBP

M4 money supply fell by 0.2% m/m, leaving the annual rate at a record low of 1.8%. Mortgage backed approvals in August fell roughly in line with consensus at 45k, an indication that the recent housing market recovery may have been exhausted.
AUD

RBA Governor Stevens offered a relatively hawkish assessment, noting that. “the fall in inflation over the past two years won’t go much further.” However, he did acknowledge that the global growth outlook was uncertain and that although global growth will be “reasonable” next year, it would not be as strong as the current year. Stevens also identified three key risks to Australia: a deeper than expected slowdown in China, a US double-dip, and the return of market turmoil.

CAD

Finance Minister Flaherty said Canada’s fiscal stimulus measures would expire as planned in March 2011.
Ahead today is Canada August CPI. The July CPI had a jump at the headline due to provincial tax changes. The August read in expected to be more subdued and the focus will be on the core CPI read relative to the BoC’s forecast. Our economists expect core CPI to tick up 0.1% m/m leaving the year-on-year rate unchanged at 1.6%.

TECHNICAL OUTLOOK

EURCHF resistance at 1.3391.
EURUSD NEUTRAL Need a break above 1.3334 to trigger bullish trend. Support holds at 1.2919.
USDJPY NEUTRAL Momentum is slowing; while resistance is at 85.93, support comes in at 85.20 ahead of 84.05 retracement level.
GBPUSD BULLISH While support at 1.5297 holds, expect recovery to target 1.5999 with scope for 1.6258 next.
USDCHF BEARISH Clearance of 0.9933/18 would expose 0.9786 next. Near-term resistance comes in at 1.0278 ahead of 1.0466.
AUDUSD BULLISH Expect gains to target 0.9500 ahead of 0.9850. Near-term support is at 0.9309 ahead of 0.9196.
USDCAD NEUTRAL 1.0509 and 1.0108 mark the key near-term directional triggers.
EURCHF NEUTRAL Recovery found resistance at 1.3391 ahead of 1.3482 retracement level. Near-term support comes in at 1.2991.
EURGBP NEUTRAL Trading within 0.8532 and 0.8142 which have now become the key directional triggers.
EURJPY NEUTRAL Break of 114.74 would put odds in favour of positive tone. Next resistance at 116.68. Support holds at 107.73 ahead of 105.44 key low.

Forex Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Source: ForexYard

The Dollar is under pressure ahead of the Federal Reserve meeting statements later today, as the possibility of further quantitative easing measures by the Fed weigh on the greenback.

Economic News

USD – Markets Await the FOMC Meeting Statements

The U.S Dollar fell against most counterparts Monday over concerns ahead of today’s Federal Reserve meeting. Speculations regarding another round of economic stimulus put investors in a cautious mood. The FOMC meeting minutes has overshadowed lingering Euro-Zone sovereign-debt issues, allowing the EUR and other counterparts to advance versus the USD as the possibility of additional asset purchasing programs weighed on the Dollar.

The U.S. Dollar did make gains on the U.K Pound, gaining around 0.5%, after Bank of England lending data measuring broad money supply for July was flat and mortgage approvals dropped to the lowest level since April 2009.

Investors were exercising caution ahead of an FOMC announcement and most currencies remained within narrow ranges. While it is not expected that more quantitative easing programs will be announced, there is the possibility the Fed will surprise the markets and be more proactive.

While the FOMC statement is the most highly anticipated news release for today, traders should also follow the release of the Building Permits and Housing Starts, both due at 12:30 GMT. The housing market remains one of the most important and highly followed indicators as a measure of economic recovery.

EUR – Renewed Sovereign Debt Concerns Weigh on EUR

The single currency came under modest pressure at the end of last week as worries about European sovereign debt increased. The EUR’s strength will be further tested this week with Irish and Portuguese debt auctions Tuesday and Wednesday, respectively.

The Pound fell against the EUR and the greenback after a report showed mortgage approvals dropped to the lowest level since April 2009. The GBP declined versus all of its major counterparts as signs the U.K.’s housing market weakened, threatened to undermine the country’s recovery from the recession.

Late Monday, the EUR was at $1.3064 from $1.3039 from late Friday and at 111.96 Yen from 112.89 Yen. The U.K. Pound was at $1.5547 from $1.5626.

The EUR/USD pair is currently trading within a tight range and is likely to remain between $1.30 and $1.31 ahead of the FOMC meeting minutes.

JPY – The AUD at a 2 year high

A Japanese holiday Monday kept Yen trading light as investors still keep an eye out for more Japanese intervention.

The Australian Dollar, a growth linked currency, gained more than 1% against the greenback. Reserve Bank of Australia Governor Glenn Stevens’s strong assessment of the Australian economy boosted the AUD higher versus the Dollar. The hawkish remarks lifted expectations of an impending interest rate hike boosting the currency.
The Australian Dollar Monday hit a series of two-year highs, topping out at $0.9495 from $0.9372 late Friday.

Crude Oil – Crude Recovers on Rising Equities

Crude Oil futures settled higher Monday as rising U.S. equities boosted optimism about the economic outlook. Light, sweet Crude for October delivery settled $1.20 higher at $74.86 a barrel on the New York Mercantile Exchange after trading as high as $75.45 earlier in the session. Spot crude is currently trading around $76 a barrel. The October crude contract is due to expire at the end of trading today.

Future economic growth and demand remain the main drivers behind oil prices. For today the focus will be on economic data as well as comments from the Federal Reserve. With Oil Inventories remaining high, the strength of the U.S economy is the most valuable tool to gauge future oil demand.

Technical News

EUR/USD

The EUR/USD cross has experienced a bullish trend for the past week. However, it seems that this trend may be coming to an end. For example, the daily chart’s Stochastic Slow signals that a bearish reversal is imminent. A downward trend today is also supported by the hourly chart’s Slow Stochastic. Going short with tight stops may turn out to pay off today.

GBP/USD

There is a bearish cross forming on the daily chart’s Slow Stochastic indicating a bearish correction might take place in the nearest future. The downward direction on the hourly chart’s Slow Stochastic also supports this notion. When the downward breach occurs, going short with tight stops appears to be preferable strategy.

USD/JPY

The 4-hour chart is showing mixed signals with its Slow Stochastic fluctuating at the neutral territory. However, a bearish cross forming on the daily chart’s Slow Stochastic implies that downwards correction might take place in the nearest time frame. Going short with tight stops might be the right strategy today.

USD/CHF

The typical range trading on the hourly chart continues. The daily chart Slow Stochastic is floating in neutral territory. However, the 4-hour Chart’s RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. Going long with tight stops might be the right strategy today.

The Wild Card

Gold

Gold prices rose significantly in the last week and peaked at $1283 an ounce. However, the daily charts’ RSI is floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

EUR/USD

Undergoes consolidation mode following yesterday’s upside rejection at 1.3156, just under 1.3186, trendline resistance. Correction has reached 1.3018 low and this now marks an initial support, as triangle is forming. Upside break will open 1.3156 for retest and above here to expose 1.3186/1.3227. Loss of 1.3020, however, would warn of fresh weakness and risk 1.2975/50 instead.

Res: 1.3095, 1.3120, 1.3156, 1.3186
Sup: 1.3020, 1.2975, 1.2955, 1.2920

GBP/USD

Extends correction off 1.5728, 17 Sep high, breaking below 1.5535/11, 16/20 Sep lows/50%retracement of 1.5295/1.5728 upleg. This opens way for further retracement, and opens 1.5461, 61.8% level.

Res: 1.5595, 1.5621, 1.5652, 1.5684
Sup: 1.5480, 1.5461, 1.5449, 1.5389

USD/JPY

Moving lower off congestive tops at 85.90 zone, with break below yesterday’s spike low at 85.50 exposing risk towards 85.21. Loss of the latter would weaken the structure, while regain of 85.80/92 will hint fresh gains and expose 86.38 next.

Res: 85.80, 85.92, 86.38, 86.89
Sup: 85.21, 85.00, 84.72, 84.50

USD/CHF

Continues to trend lower following reversal off 1.0181, and upside rejection at 1.0116, with more than 61.8% being retraced so far, at 1.0019. This confirms a negative near-term structure for retest of 0.9998/31. Only regain of 1.0116 would ease the bear pressure.

Res: 1.0073, 1.0086, 1.0116, 1.0149
Sup: 0.9998, 0.9965, 0.9931, 0.9916